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Emami reported muted volumes in the first quarter of the new fiscal year, which was in line with the trend in the FMCG industry. However, this figure inched up 6% on a year-on-year basis primarily because of the early onset of the monsoon, and the resultant fall in demand for its cooling products in hair oil and talcum powder, which is highest during summer. The local body tax (LBT)-related issues also created temporary supply chain bottlenecks in Maharasthra, affecting its Zandu Balm sales.

However, this was partly offset by the robust growth in its international business, where the revenue surged 25% in the same period.

The volume is expected to pick up in the coming quarters as, traditionally, the first quarter has reported the slowest growth for the company.

Margin expansion on the cards

The company has reported a robust margin expansion, driven by the fall in price of menthol oil, a key ingredient, as well as price hike in some products. The gross margins expanded by 370 basis points on a yearon-year basis, though this was offset partially by a jump in staff costs, resulting in an operating margin expansion of 177 basis points. The company has locked in the current price of menthol oil for the rest of the year, which is likely to keep margins buoyant for some time even after accounting for an expected increase in advertising spend.

Power brands show momentum

Most of the power brands in the company's product suite continue to witness strong growth and market share gains. Despite the monsoon impact, Navratna oil and Cool talc saw 9% and 32% revenue growth, respectively, and also gained market share. After a re-launch of its skincare product, Fair and Handsome, in June, the brand saw a 16% jump in revenue. Its flagship brand, Zandu Balm's, sales also grew 8%. Fast Relief grew the most with a 55% jump in revenue. The strong performance of its Pancharishta and Lalima brands also helped its healthcare segment clock a 27% growth. The brands and their extensions are expected to continue to do well. The company has also announced new launches in the second half of the current fiscal year, which should drive revenue.

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